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Is there a standard to how/how often your income is monitored throughout the plan?

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  • Is there a standard to how/how often your income is monitored throughout the plan?

    Sorry for all of the questions, but I'm trying to make sure I do things right!

    Is there a standard practice as to how your income and/or expenses are monitored during your plan? As in, every trustee asks for a tax return each year, pay stubs and so on? Or does it vary by trustee? Or do they have some way to run your social and just get the info themselves?

    I ask, because I want no surprises and I want to finish this and get it behind me. I "may" have what will appear to be a increase in income in 2019 (payment for health ins premium on paychecks). I would hate for the trustee to just look at the final number and assume there was an increase in pay and just dismiss my case. If and when that time comes, I want to be able to explain it so that doesn't happen. So that is why I am wondering what the procedure is on that.

  • #2
    Some trustees require you to send a copy of your tax return each year. Your attorney can tell you if your trustee is one of them. If your trustee thinks your income has increased and your plan should be modified, he must petition the court for modification. The trustee has no power to dismiss your case.

    Other than annual tax returns, trustees do not monitor your income and expenses. But, there are certain increases you must report. Ask your attorney what kind of increases you should let him know about.
    Last edited by LadyInTheRed; 12-04-2018, 11:53 AM.
    LadyInTheRed is in the black!
    Filed Chap 13 April 2010. Discharged May 2015.
    $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

    Comment


    • #3
      Thank you. Gosh, I wish they would tell you this somewhere in all of the legal documents. How else are you supposed to know? All my trustee letter said for requirements was not to incur any debts. I mean, it makes common sense, but not everyone has that (like evidently me).

      I thought trustees dismissed cases all of the time for things? I thought there was a even a post here last week where the trustee dismissed a "completed" 13 over the debtor not completing the 2nd financial class...or was that technically dismissed by the judge? (Sorry, I am just trying to understand)

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      • #4
        I think everyone's case and Trustee are different. In my case, I wasn't required to send in tax returns or refunds....although in 5 years I think I've had one refund.

        Comment


        • #5
          Another way the trustee might learn of changes to your expenses is if you have a mortgage and there is a change in the amount of payments. A mortgage company must file a notice with the court when there is a change to the mortgage payments. My mortgage payments decreased during my plan because it was adjustable and the rates were decreasing. But, the decrease was not enough to get any attention from the trustee.
          LadyInTheRed is in the black!
          Filed Chap 13 April 2010. Discharged May 2015.
          $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

          Comment


          • andersonj
            andersonj commented
            Editing a comment
            Oh! Yes, my mortgage is paid outside the plan. Also, my homeowners insurance went up quite a bit, presumably because of filing bk, as I've never had a claim.

        • #6
          Wish it were more black and white, but I guess that's ok. The refund part I have solid, because it is specifically marked on the Chapter 13 plan document. On mine, there is a section specific to tax refunds where the are two options/boxes that when marked, state whether or not you are to surrender your tax refunds. Mine is checked for not to surrender. Congrats on 5 years, btw!

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          • #7
            Originally posted by andersonj View Post
            I thought trustees dismissed cases all of the time for things? I thought there was a even a post here last week where the trustee dismissed a "completed" 13 over the debtor not completing the 2nd financial class...or was that technically dismissed by the judge? (Sorry, I am just trying to understand)
            Anyone who said that the trustee dismissed their case does not understand the process. The trustee may have petitioned the court for a dismissal, but only the judge can dismiss a case.
            LadyInTheRed is in the black!
            Filed Chap 13 April 2010. Discharged May 2015.
            $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

            Comment


            • #8
              Originally posted by wd2005 View Post
              I think everyone's case and Trustee are different. In my case, I wasn't required to send in tax returns or refunds....although in 5 years I think I've had one refund.
              Each trustee is different and each case is different. Many (maybe even most) people rarely if ever hear from their trustee between confirmation and the last payment. All I ever heard from the trustee during my plan is an annual report showing the payments they received and made during the year. I didn't have to send copies of my tax returns. I got bonuses and pay raises every year and called my attorney to tell him every time. Every time he said "congratulations, keep making your payments to the trustee." When I made my last payment I received a letter from the trustee congratulating me on completing my plan and sending forms with instructions to sign them and send them to my attorney.

              A Chap 13 really does not have to be a huge intrusion in your life once you get past confirmation. Yes, you need to learn to live within your means which may mean a very tight budget. But, that is something everybody should do anyway. For those of who end up with more debt than we could pay (whether through our own fault or through unfortunate circumstances beyond our control), we face an even tighter budget in exchange for a discharge of debt in 3 to 5 years.
              LadyInTheRed is in the black!
              Filed Chap 13 April 2010. Discharged May 2015.
              $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

              Comment


              • #9
                Originally posted by andersonj View Post
                Oh! Yes, my mortgage is paid outside the plan. Also, my homeowners insurance went up quite a bit, presumably because of filing bk, as I've never had a claim.
                I also paid my mortgage directly. The notice goes to the trustee anyway because even if you are the one making the payment, it is still part of your plan.

                The insurance increase may have gone up because of the bankruptcy, but some state laws don't allow it. I'm in California where insurance companies are not allowed to raise your rates because you filed BK. I suspect homeowners insurance rates are going up anyway because of all the disasters in the last couple of years.

                Originally posted by andersonj View Post
                Congrats on 5 years, btw!
                Thanks. It feels like ages ago! I'm back on solid financial footing and, except for my improved budgeting and saving habits, no sign of my bankruptcy remains!
                LadyInTheRed is in the black!
                Filed Chap 13 April 2010. Discharged May 2015.
                $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

                Comment


                • #10
                  In our case, our trustee requires us to send her a copy of our annual federal tax return before May 1st of each year and also submit an annual updated income/expense report on the anniversary date of case confirmation. Last year our attorney failed to submit the annual tax return to the trustee and we received a motion to dismiss our case from the trustee. Fortunately, our attorney sent the return right away and the trustee dismissed the motion. So, yes, it definitely depends on the trustee as to whether or not they monitor income/expenses.

                  Comment


                  • #11
                    You will also find that Chapter 13 Trustees are individuals that, in many cases, have differences in how they operate. Some Chapter 13 Trustees (Tees) don't care if you earn more money; those Tees will tell you just to make your monthly payment and to not worry. Other Tees may track certain cases more closely -- maybe especially where the debtor is not making any (or little) contribution to the unsecured pool. Chapter 13 debtors that operate a business or rely solely on commissions will receive the utmost scrutiny and have more stringing income reporting requirements. The simple fact is that each case is unique, and this is especially true in a Chapter 13.

                    The best thing for a Chapter 13 debtor to do is... stay off the Chapter 13 Trustee's radar. Make your payments on time. Report any changes in income, or emergency issues, to your attorney-of-record immediately. Chapter 13 can deal with many issues, and Chapter 13 Trustees don't like surprises. They literally aren't successful unless you are successful. Their pay is tied directly to keeping you on track... despite how harsh they may seem.



                    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                    Status: (Auto) Discharged and Closed! 5/10
                    Visit My BKForum Blog: justbroke's Blog


                    I am not an attorney. Any advice provided is not legal advice.

                    Comment


                    • #12
                      I agree with justbroke -we are paying only 25% of the allowed total claims and are saddled with a $2200+mortgage every month (which increased monthly by almost $100 in May) in addition to the monthly $90 solar panel lease fee, so we are already aware that the trustee is paying "special attention" to our case. It makes sense when you are unable to pay back 100% or over at least 60% , you will be scrutinized more closely.
                      In our case, I was having enormous medical bills at the time of confirmation( fully documented and noted by the various doctors treating me at the time in lengthy reports,tests, and MRIs,etc.),so we were allowed to keep $400 of the plan payment that the trustee originally demanded. This year most of those issues have subsided (mainly because I haven't sought out a new PCP and therefore didn't have to have costly tests and blood work), but those costs have been replaced by serious dental issues, including the loss of a tooth that so far I am financially unable to replace with a very pricey implant. And that's only me- my husband needs root canals and crowns too!
                      while our CO doesn't mention handing over tax refunds, or employment increases, it is certain he is monitoring our income, as their office requested the 2017 tax returns (filed in March of this year) on our confirmation anniversary in August. Apparently the HSA plan increases , 1% raise and the yearly mortgage increase (due to an escrow shortage of nearly $1200) helped to show a decrease in income over our projected plan petition income in 2017 and kept him from raising our payment this year at least.

                      Comment


                      • #13
                        My trustee never raised my plan payment during my 13.
                        I was not required to turn over tax refunds to the trustee
                        I was not required to provide annual tax returns or income/expense statements.



                        Filed Ch 13 Fall 2013, 60 month plan, currently in discharge process! (last payment disbursed to creditors)

                        Comment


                        • #14
                          My plan info was the same as switch625's. I was in a 100% payment plan. Our confirmation notice showed that tax returns/refunds did not have to be paid back.
                          Filed Chapter 13 - 07/20/12
                          Discharged 8/2/16

                          Comment


                          • #15
                            My Attorney told me that the Trustee doesn't monitor checking accounts, but does require me to provide tax info at tax time, and any refund I get goes to the Trustee here in Arizona. He also told me that the Trustee won't do anything unless my year to year income jumped 10% from the previous year. I made sure to be 100% honest because with my job one year I can make $52k, the next year $67k, it varies WILDLY because it is sales and it's a roller coaster ride. I'm only 3 months into my 60 month plan, and I'm sure there will be times I will need my Attorney, so glad I picked a really good one that I feel 1000% confident with.

                            It's literally been exactly 1 year since I started posting heavily about my debt drama, and HOLY COW am I in a much better spot as I'm typing this...sorry just had to throw that in there. I thought it was the end of the world, felt like I was in a bottomless pit.

                            Best of luck and Happy Holidays!

                            Comment

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